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ChartWalk (Brazil Fund)
January 22, 1995
Chart reading pays! The weekly Brazil Fund chart below signaled trouble was brewing long before the peso crisis hit the news. Chart shows bearish Broadening Top (BT) formation. This pattern is also referred to as an Expanding Top or Megaphone.
BT's occur infrequently & consist of 3 peaks at successively higher levels (1,3,5) with two bottoms in between (2 & 4). The second bottom (4) is lower than the first (2). The pattern is "completed" once low of point 4 is broken C). BT's are whipsaw patterns because they are undetectable until prices advance from the point 4 low (late October, 1994), subsequent to "false breakouts" at points 3 & 4.
Broadening Bottoms (on charts) are extremely rare.